TCFD
The Task Force on Climate-Related Financial Disclosures (TCFD) is an international body that was created by the Financial Stability Board (FSB) in 2015. The FSB is an international organisation that promotes financial stability through the development of standards and policies in the financial sector.
The TCFD's mission is to develop recommendations for companies, banks, and investors to disclose climate-related financial risks. The TCFD's recommendations are voluntary, but they are increasingly being adopted by companies and governments around the world.
The recommendations cover four key areas:
Governance: How a company's board of directors and management oversee climate-related risks and opportunities.
Strategy: How a company's strategy takes into account climate-related risks and opportunities.
Risk management: How a company identifies, assesses, and manages climate-related risks.
Metrics and targets: How a company measures and reports on climate-related risks and opportunities.
The TCFD's recommendations are designed to help companies disclose information that is relevant to investors and other stakeholders about how climate change could affect their businesses. This information can help investors make more informed decisions about where to invest their money, and it can help companies manage their climate-related risks.
The TCFD's recommendations are not yet mandatory in most jurisdictions, but there is a growing trend towards making them mandatory. In the UK, for example, companies with more than 500 employees and a turnover of more than £500 million are now required to submit TCFD-aligned reports.
The TCFD's recommendations are an important step towards ensuring that companies disclose the full extent of their climate-related risks and opportunities. This information is essential for investors and other stakeholders to make informed decisions about the future of their investments.
Here are some of the specific information that companies are expected to disclose under the TCFD's recommendations:
The company's board of directors' oversight of climate-related risks and opportunities.
The company's strategy for managing climate-related risks and opportunities.
The company's processes for identifying, assessing, and managing climate-related risks.
The company's metrics and targets for measuring and managing climate-related risks and opportunities.
The company's actual and potential impacts of climate-related risks and opportunities on its businesses, strategy, and financial planning.
The TCFD's recommendations are comprehensive and cover a wide range of climate-related risks and opportunities. The recommendations are also flexible, so that companies can tailor their disclosures to their specific circumstances.